What You Can Do to Help Your Carrier Pay Your Claim

Recently, a fire caused substantial damage to my client’s residence and destroyed all of his personal property. This type of loss are the most emotionally difficult to navigate because they are life changing. All my client wants is his life back to normal.

It is always difficult to explain to a client the precautionary steps should have taken before the catastrophe struck. I mean, doesn’t everyone keep all of their receipts? Doesn’t everyone take an annual inventory of what they own and have corresponding photographs?

If you don’t, you need to. One of the most important things every policyholder can do is to take an inventory of their personal property and include costs.

To make your job easier, I have attached a link to a Home Inventory Worksheet provided by United Policyholders. This checklist is easy to complete and will likely improve the adjusting process if disaster strikes. Keep receipts of your major purchases and even attach pictures of your property to your checklist.

Just as important, is verifying that you have enough coverage for your personal property. Again, your Home Inventory Checklist can help ensure that you do. When your policy is up for renewal, take your Home Inventory Checklist to your agent and make sure that sufficient coverage is provided for under your policy. Policyholders should also consider whether they want to pay additional premium for replacement cost value coverage rather than actual cash value coverage. If you opt for replacement cost value coverage, the carrier will not depreciate the value of your personal property in adjusting your claim. It is a wonderful option provided for by carriers to help policyholders put their lives back together after a catastrophic event. For a more thorough discussion of replacement cost coverage, you can read my prior posts, Understanding the Importance of "Replacement Cost Value" Coverage, and Understanding the Importance of "Replacement Cost Value" Coverage, Part Two.

There are many other precautionary steps policyholders can take to help their carriers adjust their claims promptly and fairly. Take the time to consult with a qualified insurance professional now, before a peril strikes.

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Comments (4) Read through and enter the discussion with the form at the end
John McDougall - April 6, 2012 12:29 PM

The United Policy Holders Inventory provided requests the date of purchase, it should request the condition of the item claimed.

The Insurance policy is supposed to indemnify the insured (To quote a Farmers advertisement “Get you back where you belong”). So replacing an old item with a new item sometimes makes the Insured better off than before the loss. Older items may be subject to wear and tear or obsolescence. To solve that problem, Betterment was applied; reducing the replacement cost by a percentage to account for the difference between the value of the older item and the brand new one.

Over time, betterment began to be called depreciation. So the replacement cost of the item was depreciated to account for the difference in value between new and old. Unfortunately, the only meaning of depreciation most people understand is the straight-line accounting method of depreciation (i.e., depreciating an item by a set percentage based on the items age, e.g., 25% per year.) The accounting method has nothing to do with an items value to the person who owns the item; it is used primarily for income tax purposes. (Homeowners cannot take a depreciation tax deduction on their personal property).

The insurance companies use the date of purchase to apply their straight line depreciation schedule, which results in grossly excessive depreciation being applied.

Brent Winans - April 6, 2012 1:06 PM

Larry, thank you for this excellent advice and the United Policyholder spreadsheet. Unfortunately, almost no one is willing to complete and update this type of information before a loss. The best compromise I have found is to encourage clients to walk around their house once a year with a video camera. Open all of the drawers and closet doors and remember to video the top shelves and under the beds. Do a video of the outside as well, and if you can, take a video of your roof to show its condition. Then back up your video to the cloud or send a copy out of state. At least that way when there is a claim, you will be able to remember what should go on the spreadsheet for the claims adjuster.

Dimitri - April 11, 2012 2:00 PM

Thanks for the "Home Inventory Worksheet".

Renee English - April 20, 2012 9:12 AM

Thanks for the worksheet! We like to help educate those that are not interested in using our services for home and business documentation. Hopefully they will do it themselves!!! Plan on sharing this article on our social media sites!

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